Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to help investors identify stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores categorize stocks into four main types: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score identifies undervalued stocks using financial ratios [3] - Growth Score assesses a company's future growth potential based on earnings and sales [4] - Momentum Score evaluates stocks based on recent price trends and earnings estimate changes [5] - VGM Score combines all three styles to highlight stocks with the best overall characteristics [6] Zacks Rank and Style Scores Interaction - The Zacks Rank utilizes earnings estimate revisions to guide investors in stock selection [7] - Stocks rated 1 (Strong Buy) have historically outperformed the S&P 500, achieving an average annual return of +25.41% since 1988 [8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [9] Company Spotlight: Federated Hermes - Federated Hermes, Inc. is a global asset manager with $839.8 billion in assets under management as of March 31, 2025 [11] - The company currently holds a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating solid performance metrics [11] - Recent analyst revisions have increased the earnings estimate for fiscal 2025 by $0.42 to $4.33 per share, with an average earnings surprise of 13.1% [12]

The Zacks Investment Management industry continues to bear the brunt of a constant shift toward passive investing. As fees earned by the industry players are lower compared with active investment strategies, this continues to exert pressure on margins. Also, tighter regulations, rising compliance costs and technology upgrades are expected to strain industry players’ profitability. Yet, the industry will benefit from investors' shift toward higher-yielding investment vehicles. Hence, sustained economic growt ...

Federated Hermes Inc. (FHI Quick Quote - Free Report ) is well-positioned to gain from its steady improvement in assets under management (AUM). Backed by a diverse asset mix and strategic acquisitions, the company continues to expand its market presence. Additionally, its decent liquidity position supports sustainable capital distribution activities, reinforcing shareholder value. Franklin Resources Inc. (BEN Quick Quote - Affiliated Managers Group (AMG Quick Quote - Over the last year, shares of FHI ...

Financial Performance - As of March 31, 2025, Federated Hermes reported a net income attributable to shareholders of $101.1 million, an increase of 34.7% compared to $75.0 million for the same period in 2024[74]. - The earnings per share for the three months ended March 31, 2025, was $1.25, up from $0.89 in the same period of 2024, reflecting a 40.4% increase[74]. - Federated Hermes reported total revenue of $423.54 million for the period ending March 31, 2025, representing a 6.3% increase from $396.37 million in the same period of 2024[86]. - Domestic revenue increased to $365.80 million in Q1 2025, up 9.0% from $335.43 million in Q1 2024, while foreign revenue decreased to $57.74 million from $60.94 million[86]. - Net income increased by $26.1 million for the three-month period ended March 31, 2025, compared to the same period in 2024[169]. - Revenue increased by $27.2 million for the three-month period ended March 31, 2025, primarily due to an increase in money market revenue of $21.3 million[163]. Shareholder Returns - Federated Hermes declared a dividend of $0.34 per share to shareholders, payable on May 15, 2025, to those on record as of May 8, 2025[91]. - The board declared a dividend of $0.34 per share to be paid on May 15, 2025[181]. - Total shares repurchased in Q1 2025 amounted to 3,057,542 shares at an average price of $39.29 per share[199]. - The company reaffirmed its commitment to returning capital to shareholders, with a planned dividend increase of 5% in Q2 2025[209]. Asset Management - As of March 31, 2025, Federated Hermes managed assets totaled $839.8 billion, indicating strong asset management capabilities[94]. - Total managed assets increased by 8% to $839,773 million as of March 31, 2025, compared to $778,686 million in 2024[146]. - Average managed assets rose by 9% to $843,204 million for the three months ended March 31, 2025, from $776,502 million in 2024[147]. - Fixed-income total assets grew to $99,486 million, reflecting a 3% increase from $96,325 million in 2024[150]. - Equity funds saw net sales of $1,072 million, a significant improvement compared to net redemptions of $1,650 million in the previous year[148]. - Money market assets increased by 10% to $637,122 million, up from $578,811 million in 2024[146]. - Total fund assets rose by 9% to $569,201 million, compared to $520,245 million in 2024[146]. - Separate account assets increased by 5% to $270,572 million, up from $258,441 million in 2024[146]. - Fixed-income separate accounts reported ending assets of $53,686 million, a 4% increase from $51,844 million in 2024[150]. - The company reported a market gain of $1,585 million in fixed-income assets, contributing to the overall asset growth[150]. Regulatory Environment - The company faces a complex regulatory environment, with ongoing evaluations of the impact of new regulations under the current U.S. administration[98][102]. - The SEC announced a six-month extension for compliance dates of the Names Rule amendments, with larger fund groups now required to comply by June 11, 2026, and smaller fund groups by December 11, 2026[119]. - The SEC extended the effective and compliance dates for Form N-PORT amendments by at least two years, with new deadlines set for November 17, 2027, for larger fund groups and May 18, 2028, for smaller fund groups[123]. - The SEC's new Compliance and Disclosure Interpretation (C&DI) emphasizes that shareholder engagement may now be viewed as an attempt to influence control, potentially affecting eligibility for reporting on Schedule 13G[112]. - The SEC Staff Legal Bulletin No. 14M reinstated earlier guidance allowing companies to exclude shareholder proposals on economic relevance and ordinary business grounds, particularly for social policy issues[113]. - The SEC announced amendments to eliminate the delegation of authority to its Enforcement Director, potentially lengthening the investigation process for violative conduct[114]. - The new DOL fiduciary rule allows plan fiduciaries to consider governance, environmental, and social factors in investment decisions, but remains subject to potential challenges[116]. - The SEC Climate-Related Disclosure Rule, requiring large companies to disclose greenhouse gas emissions and financial impacts of severe weather, is currently under legal challenge and its future is uncertain[116]. - The Presidential administration has ordered foreign companies with U.S. government contracts to comply with the DEI executive order, impacting international business operations[111]. - The SEC's updated guidance on the Names Rule requires funds to adopt an 80% Policy for specific investment types, affecting compliance strategies for many funds[118]. - The U.S. House Judiciary Committee is investigating Institutional Shareholder Services (ISS) and Glass Lewis for alleged antitrust violations in the proxy advisory industry, with records requested dating back to 2021[124]. - On December 20, 2023, subpoenas were issued to ISS and Glass Lewis as part of a probe into governance, environmental, and social-related violations of U.S. antitrust laws[124]. - The House Judiciary Committee's interim report on December 13, 2024, detailed alleged collusion among major financial institutions and climate activists to pressure U.S. companies into committing to "net zero" climate goals[124]. - The European Commission published the Omnibus Package on February 26, 2025, aimed at simplifying EU sustainability laws and reducing the number of entities under the Corporate Sustainability Reporting Directive (CSRD)[129]. - The FCA in the U.K. announced a delay in the publication of a policy statement on extending sustainability disclosure requirements to asset managers providing individual portfolio management services[131]. - The EU Digital Operational Resilience Requirements (DORA) became effective on January 17, 2025, with ongoing developments and compliance challenges noted[136]. - The U.K. Government plans to legislate T+1 as the standard settlement cycle starting on October 11, 2027, aligning with the EU's transition[135]. - Federated Hermes is actively monitoring and assessing the impact of regulatory developments on its business and financial condition, including interest rate fluctuations and market instability[140]. - The complexity and number of regulatory requirements are increasing compliance costs and may materially impact Federated Hermes' financial condition[142]. - As of March 31, 2025, Federated Hermes is unable to fully assess the impact of ongoing regulatory developments on its financial condition due to the evolving regulatory environment[144]. Operational Insights - Significant operating expenses include Compensation and Related expenses and Distribution expenses, which are influenced by overall operational results and sales performance[96]. - The company’s Right-of-Use Assets and Property and Equipment, net totaled $123.85 million as of March 31, 2025, down from $130.28 million at the end of 2024[87]. - Liquid assets totaled $578.4 million at March 31, 2025, down from $694.1 million at December 31, 2024[170]. - Operating expenses increased by 8% to $150 million, primarily due to investments in technology and marketing[209]. - The interest coverage ratio was 44 to 1, significantly above the required minimum of 4 to 1, and the leverage ratio was 0.65 to 1, well below the maximum of 3 to 1[177]. - Management expects to invest approximately $280 million over the next three years for technology-driven initiatives[179]. Strategic Initiatives - The company entered into a share purchase agreement to acquire a 60% equity interest in Rivington Energy Management for £23.7 million ($30.6 million), aimed at expanding its growth in non-U.S. markets[90][89]. - The acquisition includes a £12.9 million ($16.7 million) capital contribution for Rivington's growth and debt repayment, with potential contingent payments of up to £10.7 million ($13.8 million) based on revenue growth[90]. - Federated Hermes is investing in new technology, with a budget allocation of $30 million for digital platform enhancements in 2025[209]. - The company plans to expand its market presence in Asia, targeting a 20% increase in market share by 2026[209]. - A strategic acquisition of a smaller asset management firm is in progress, expected to close by Q3 2025, which will add approximately $10 billion in AUM[209]. - The company is focusing on sustainable investment products, aiming to launch three new ESG-focused funds by the end of 2025[209].

Financial Data and Key Metrics Changes - The company ended Q1 2025 with record assets under management (AUM) of $840 billion, driven by record money market assets of $637 billion [6][20] - Total revenue for Q1 decreased slightly from the prior quarter, with higher revenue from money market assets offset by lower revenue from equity assets [25] - Q1 operating expenses decreased by $22.5 million from the prior quarter, mainly due to lower FX-related expenses [26] Business Line Data and Key Metrics Changes - Equity assets increased by $1.5 billion from year-end, primarily due to net sales of $1.4 billion [6] - Fixed income assets increased by about $1.4 billion in Q1, mainly due to higher market valuations, partially offset by net redemptions [11] - Alternative private markets saw an increase of $562 million in Q1, driven by FX rates and net sales of about $61 million [12] Market Data and Key Metrics Changes - The company’s money market mutual fund market share was approximately 7.10% at the end of Q1, down slightly from 7.22% at the end of 2024 [23] - Managed assets were approximately $828 billion, including $629 billion in money markets, $78.5 billion in equities, and $98 billion in fixed income [24] Company Strategy and Development Direction - The company is focused on developing its private markets business for growth, including the acquisition of a majority interest in a U.K. renewable energy company [17] - The company plans to continue adding active ETFs, with a goal of launching a handful each year [91] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter is typically the worst quarter of the year for the industry, but this year saw positive flows [37] - There are expectations for higher interest rates for a longer period, which is anticipated to continue driving positive flows into money market products [52] Other Important Information - The company declared a $0.34 per share dividend, an increase of nearly 10% from the prior quarter [29] - The company purchased over 3 million shares for about $120 million during Q1 [30] Q&A Session Summary Question: Comments on money market market-share - Management clarified that the company had $3 billion of increased money market fund AUM, indicating positive inflows despite competitive pressures [32][36] Question: Update on fixed-income outflows - Management attributed elevated fixed-income outflows primarily to the Total Return Bond Fund and High Yield, with performance improving [42][44] Question: Flows since tax date - Management reported an increase of about $5 billion in assets since the tax date, indicating positive flows from both retail and institutional sides [55] Question: Capacity issues with MDT - Management confirmed there are no capacity issues with MDT despite significant organic growth [96]

Analyst Update Data as of March 31, 2025 Federated Hermes, Inc. 1 25-30034 Forward-looking information This presentation is provided as of the date on the cover and contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking, including those related to product performance, the potential for business ...

Federated Hermes, Inc.’s (FHI) first-quarter 2025 adjusted earnings per share of $1.10 topped the Zacks Consensus Estimate of 91 cents. The bottom line grew 23.6% from the year-ago quarter.Increased net administrative service fees and net investment advisory fees are major driving factors. The company’s total managed assets touched a record level. A rise in revenues and a decline in expenses were added advantages.Net income (GAAP basis) of $101.1 million rose 35% from the year-ago quarter.FHI’s Revenues & O ...

Core Viewpoint - Federated Hermes reported quarterly earnings of $1.10 per share, exceeding the Zacks Consensus Estimate of $0.91 per share, and showing an increase from $0.89 per share a year ago [1][2] Financial Performance - The company achieved revenues of $423.54 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.88%, and up from $396.37 million year-over-year [3] - The earnings surprise for the quarter was 20.88%, and the company has surpassed consensus EPS estimates in all four of the last quarters [2] Market Position and Outlook - Federated Hermes shares have declined approximately 8% since the beginning of the year, slightly better than the S&P 500's decline of 8.6% [4] - The current consensus EPS estimate for the upcoming quarter is $0.93 on revenues of $422.77 million, and for the current fiscal year, it is $3.81 on revenues of $1.7 billion [8] Industry Context - The Financial - Investment Management industry, to which Federated Hermes belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, indicating potential challenges ahead [9] - Another company in the same industry, GCM Grosvenor Inc., is expected to report quarterly earnings of $0.20 per share, reflecting a year-over-year increase of 42.9% [10]

Core Insights - Federated Hermes, Inc. reported Q1 2025 earnings per diluted share (EPS) of $1.25, a significant increase from $0.89 in Q1 2024, with net income rising to $101.1 million from $75.0 million year-over-year [1][15][19] - The company achieved record total managed assets of $839.8 billion as of March 31, 2025, reflecting an 8% increase from $778.7 billion a year earlier [2][15] - The board declared a quarterly dividend of $0.34 per share, marking a 9.7% increase from the previous quarter [3][15] Financial Performance - Revenue for Q1 2025 increased by $27.2 million or 7% compared to Q1 2024, driven by higher average money market assets and increased performance fees [8][19] - Operating expenses decreased by $6.0 million or 2% primarily due to a VAT refund and fluctuations in foreign currency exchange rates [10][19] - Nonoperating income decreased by $1.2 million, attributed to a smaller increase in the market value of investments compared to the previous year [11] Asset Management - Total average managed assets for Q1 2025 were $843.2 billion, up 9% from $776.5 billion in Q1 2024 [2] - Money market assets reached a record $637.1 billion, up 10% from $578.8 billion year-over-year [7][15] - Equity assets increased to $80.9 billion, a 1% rise from $80.2 billion in Q1 2024, while fixed-income assets rose to $99.5 billion, up 3% from $96.3 billion [4][5] Investment Strategies - The company noted strong inflows into money market funds and separate accounts as investors sought stability amid market volatility [3] - Demand for MDT products, particularly the MDT Market Neutral Fund, was robust, aiming for long-term capital appreciation with limited stock market risk exposure [3] Shareholder Actions - During Q1 2025, Federated Hermes repurchased 3,057,542 shares of its class B common stock for $120.1 million [3] - The company ranks in the top 7% of equity fund managers and the top 8% of money market fund managers in the industry [17]

Core Points - Federated Hermes, Inc. will report financial and operating results for Q1 2025 on April 24, 2025, after market close [1] - A conference call for investors and analysts is scheduled for April 25, 2025, at 9 a.m. Eastern [1] - The company manages $829.6 billion in assets as of December 31, 2024, providing a range of investment solutions [5] Company Information - Federated Hermes is a global leader in active investment management, serving over 10,000 institutions and intermediaries worldwide [5] - The company offers various investment strategies, including equity, fixed-income, alternative/private markets, multi-asset, and liquidity management [5] - Headquartered in Pittsburgh, Federated Hermes has more than 2,000 employees across multiple global offices [5]